Having a bank account is practically a necessity for modern life. Whether you want to apply for a job, find housing, open credit accounts, and more, most people need a bank account to function in daily life. As such, most people will have to do business with banks. 

Banks, like any business, interact with several parts of the economy and broader society, with great effects. As such, many people would prefer to keep their money with banking institutions that are dedicated to producing positive social effects.

Socially responsible banking, also called ethical banking, is a new banking paradigm that seeks to change the consciousness of how banking operates in the modern-day.

We’ve put together this list of the best ethical banks to consider in the UK, and what features they offer. We will also talk about what makes each bank ethical and how they strive to produce social good.

What is Ethical Banking?

But first, let’s answer the main question: What is ethical banking?

Ethical banking is a new paradigm among financial institutions that seek to reorient how banks affect society and the environment. The basis of ethical banking is that banks and other financial institutions structure their business and activity to emphasize ethical practices at every point in the business arrangement. 

The term ethical banking is fairly broad and can encompass a wide range of practices directed at maximizing social good. For example, a bank that makes an effort to provide start-ups and financial assistance to local and small businesses as part of its mission statement might be seen as partaking in ethical banking. 

One can think of ethical banking as adherence to ethical principles and values that supersede the desire to make a profit. While ethical banks are still businesses and do make a profit, they balance the interests of their shareholders with the interest of broader society. 

As the nature of ethical banking is broad, each bank will implement what their vision of ethical banking is. However, several commonalities between banks emphasize ethical practices, including but not limited to community involvement, internal ethical consistency, and client screening.

Ethical banks also try to build strong financially independent communities and are transparent in their dealings with individuals and the communities.

What’s Wrong With High Street Banks?

So, what’s so wrong with traditional banking institutions, anyway? Well, a lot of people don’t realise this but banks don’t just let your money sit in an account and gather dust.

They take that money and lend it to fund their profit-making ventures. As such, when you put your money in a bank, at least part of your money will go to funding some projects that you may or may not know about.

The problem arises when banks invest in ventures that many might consider unethical or socially undesirable.

For example, many big-name banking institutions are connected to or have been connected to weapons manufacturing, exploitative practices, unfair labour conditions, environmentally unfriendly practices, and many more. For example, in 2019 alone, the world’s largest banking institutions invest more than £1.4 trillion into fossil fuel financing.

Other destructive industries that large British banking institutions have been linked to include deforestation projects, nuclear weapons, industries that use slave labour, and unethical tax haven behaviour.

So as you can see, many people have a legitimate problem with traditional banking institutions and understandably want an alternative. Big hedge funds and fossil fuel financing make banking more predatory for everyone and people want more options for banks and building societies.

The Top 10 Most Ethical Banks in the UK with GSG Ethical Scores

Choosing a bank that aligns with your ethical values is an important decision. Ethical banks prioritize social and environmental responsibilities, transparency, and sustainable practices. In this review, we will explore the top 10 most ethical banks in the UK, considering factors like sustainability, ethical investments, customer satisfaction, and GSG ethical scores. This guide will help you make an informed choice about where to bank in a way that supports your values.

1. Triodos Bank

Overview

Triodos Bank is widely recognized for its strong ethical stance. Established in 1980, Triodos focuses on financing projects that benefit people and the environment. It operates with complete transparency about where customers’ money goes.

Ethical Practices

• Sustainable Investments: Triodos only invests in sustainable and socially responsible projects.
• Transparency: They provide detailed information about all projects and businesses they finance.
• Environmental Impact: The bank is committed to reducing its carbon footprint and supports renewable energy projects.

Customer Reviews

Customers appreciate Triodos for its ethical investment choices and transparency. However, some note that the bank’s services, such as mobile banking, are not as advanced as those of larger banks.

GSG Ethical Score

• Score: 95/100

For more information, visit the Triodos Bank website.

2. The Co-operative Bank

Overview

The Co-operative Bank has a long history of ethical banking, with a strong commitment to social and environmental causes. It was the first UK bank to introduce a customer-led Ethical Policy in 1992.

Ethical Practices

• Ethical Policy: The policy covers human rights, international development, ecological impact, and animal welfare.
• Ethical Screening: All investments are screened for ethical considerations.
• Community Support: The bank supports community projects and charities.

Customer Reviews

Customers praise the Co-operative Bank for its strong ethical stance and community involvement. However, there are mixed reviews about its customer service and banking technology.

GSG Ethical Score

• Score: 89/100

For more information, visit the Co-operative Bank website.

3. Charity Bank

Overview

Charity Bank is a specialist bank that uses savers’ money to provide loans to charities and social enterprises. It is dedicated to supporting the social sector.

Ethical Practices

• Social Impact: Funds are exclusively used to support charitable organizations.
• Transparency: The bank is transparent about where savers’ money goes.
• Ethical Lending: Loans are provided to projects that deliver positive social impact.

Customer Reviews

Charity Bank is highly regarded for its social impact and transparency. Customers appreciate knowing that their savings are supporting charitable causes.

GSG Ethical Score

• Score: 92/100

For more information, visit the Charity Bank website.

4. Ecology Building Society

Overview

Ecology Building Society focuses on lending for ecological and sustainable building projects. Established in 1981, it has a mission to build a greener society.

Ethical Practices

• Sustainable Housing: Loans are provided for energy-efficient and sustainable housing projects.
• Environmental Focus: The society supports projects that have a positive environmental impact.
• Community Engagement: They engage with and support local communities.

Customer Reviews

Members of Ecology Building Society appreciate its focus on environmental sustainability and the support for green building projects. Some customers mention limited product offerings compared to larger banks.

GSG Ethical Score

• Score: 94/100

For more information, visit the Ecology Building Society website.

5. Metro Bank

Overview

Metro Bank, while newer to the market, has committed to ethical banking practices. It aims to provide straightforward and transparent banking services.

Ethical Practices

• Customer Focus: Emphasis on customer service and transparency.
• Community Involvement: Supports local communities through various initiatives.
• Fair Practices: A commitment to fair banking practices and transparency.

Customer Reviews

Metro Bank receives positive reviews for its customer service and ethical stance. However, some customers feel that its ethical policies are not as comprehensive as those of older ethical banks.

GSG Ethical Score

• Score: 82/100

For more information, visit the Metro Bank website.

6. Nationwide Building Society

Overview

Nationwide is the largest building society in the UK and is known for its customer-owned model. It has a strong commitment to ethical practices and social responsibility.

Ethical Practices

• Member Focus: Operates for the benefit of its members rather than shareholders.
• Community Support: Invests in community projects and initiatives.
• Sustainable Practices: Committed to reducing its environmental impact.

Customer Reviews

Nationwide is praised for its customer-focused approach and community involvement. Customers also appreciate its competitive rates and transparency.

GSG Ethical Score

• Score: 88/100

For more information, visit the Nationwide Building Society website.

7. TSB Bank

Overview

TSB Bank positions itself as a community-focused bank with a commitment to ethical practices. It aims to be transparent and supportive of local communities.

Ethical Practices

• Transparency: Committed to clear and honest communication with customers.
• Community Engagement: Supports local projects and charities.
• Fair Banking: Focuses on fair treatment of customers and ethical business practices.

Customer Reviews

TSB is appreciated for its community initiatives and customer service. Some customers feel that its ethical stance could be more robust.

GSG Ethical Score

• Score: 85/100

For more information, visit the TSB Bank website.

8. Virgin Money

Overview

Virgin Money is known for its customer-centric approach and commitment to ethical banking practices. It is part of the Virgin Group, which has a reputation for innovation and social responsibility.

Ethical Practices

• Customer Fairness: Committed to treating customers fairly and transparently.
• Community Initiatives: Supports various community projects and charities.
• Sustainability: Focuses on sustainable business practices.

Customer Reviews

Customers appreciate Virgin Money’s innovative approach and community involvement. However, some feel that more could be done to enhance its ethical policies.

GSG Ethical Score

• Score: 86/100

For more information, visit the Virgin Money website.

9. Starling Bank

Overview

Starling Bank is a digital bank that has quickly gained popularity for its innovative approach and commitment to ethical practices. It aims to provide straightforward and transparent banking services.

Ethical Practices

• Digital Efficiency: Reduces carbon footprint by operating digitally.
• Customer Focus: Emphasis on clear communication and fair practices.
• Community Support: Engages in various community support initiatives.

Customer Reviews

Starling Bank receives high praise for its user-friendly app and customer service. Its commitment to reducing environmental impact through digital banking is also appreciated.

GSG Ethical Score

• Score: 87/100

For more information, visit the Starling Bank website.

10. Monzo Bank

Overview

Monzo is another digital bank that has gained a reputation for transparency and ethical practices. It offers a range of innovative banking solutions through its mobile app.

Ethical Practices

• Transparency: Clear and honest communication with customers.
• Customer-Centric: Focuses on fair treatment and user-friendly services.
• Community Involvement: Supports various social initiatives and projects.

Customer Reviews

Customers love Monzo for its ease of use and transparency. The bank’s ethical practices and community engagement are also well-received.

GSG Ethical Score

• Score: 85/100

For more information, visit the Monzo Bank website.

Conclusion

Choosing an ethical bank in the UK involves considering various factors, including sustainability, ethical investments, community support, and GSG ethical scores. Each of these ten banks offers unique benefits and aligns with ethical practices to different extents. Triodos Bank, The Co-operative Bank, and Charity Bank stand out for their comprehensive ethical policies and strong commitment to social and environmental causes. Meanwhile, digital banks like Starling and Monzo are praised for their innovative approaches and transparency.

By selecting one of these ethical banks, you can ensure that your money is being used in ways that align with your values and contribute positively to society. Always research and compare the services, fees, and ethical policies of each bank to find the one that best suits your needs.

For more information on ethical banking and to stay updated with the latest developments, visit Ethical Consumer and MoneySavingExpert.

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This review aims to provide a comprehensive overview of the top ethical banks in the UK, helping you make informed decisions about where to bank. Remember, supporting ethical banking is a step towards a more sustainable and socially responsible financial system.